Krones AG Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Investors in Krones AG (ETR:KRN) had a good week, as its shares rose 7.2% to close at €89.55 following the release of its half-yearly results. The result was positive overall - although revenues of €1.7b were in line with what the analysts predicted, Krones surprised by delivering a statutory profit of €1.80 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Krones after the latest results.

See our latest analysis for Krones

Taking into account the latest results, the most recent consensus for Krones from nine analysts is for revenues of €3.56b in 2021 which, if met, would be a credible 5.3% increase on its sales over the past 12 months. Krones is also expected to turn profitable, with statutory earnings of €3.32 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of €3.55b and earnings per share (EPS) of €3.34 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The consensus price target rose 9.5% to €96.11despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Krones' earnings by assigning a price premium. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Krones, with the most bullish analyst valuing it at €123 and the most bearish at €72.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Krones' growth to accelerate, with the forecast 11% annualised growth to the end of 2021 ranking favourably alongside historical growth of 0.8% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Krones to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Krones going out to 2023, and you can see them free on our platform here.

We also provide an overview of the Krones Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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